On Monday, August 27th, President Trump announced the agreement between the US and Mexico’s trade negotiators of a finalized bilateral trade deal which would in effect replace NAFTA - the North American Free Trade Agreement, between Canada, Mexico, and the United States created a free trade zone between the three nations, allowing for greater production between these countries. Revisions to the trade deal include updates to provisions around the digital economy, automobiles, agriculture, and labor unions. Negotiations with Canada began this week, and if they do not come to an agreement with the new trade deal by Friday, Canada will be left out.
From the research I have done, it is unclear as to whether NAFTA is responsible for the loss of jobs in America. There are mixed results. One finding by the Economic Policy Institute found that 700,000 jobs were lost when production moved to Mexico. Another report from the Peterson Institute for International Economics said that only 5 percent of dislocated US workers could be traced to imports from Mexico. Due to this uncertainty, I think that more research should be done before any drastic changes are made to NAFTA.
Questions:
- Do you think NAFTA should be revised?
- Why do you think Trump is so eager to implement the new trade deal?
- What do you think will happen if the new trade deal is emplaced?
Sources:
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ReplyDeleteI believe that NAFTA should be revised to help balance the relationship between companies and the workers they’re employing . NAFTA, like many other trade agreements, doesn't improve wages or working conditions. In fact, it allows industries to easily exploit workers and the environment. NAFTA should be changed with the intention of giving more power to workers and labor groups. I assume that Trump is eager to implement the new trade deal to maintain support from those living in the Rust Belt, as many manufacturing jobs were lost in that area. If NAFTA were to be emplaced, tariffs would become higher leading to imported goods becoming more expensive. Companies would struggle readjusting as it would become more costly to do business in Mexico and other countries. Despite the drawbacks that I mentioned, I believe that it is important for workers to have a bigger say in the industry.
ReplyDeleteI think that NAFTA should not be revised since it is one of the biggest economic powerhouses in North America valued at $20.08 trillion. NAFTA helped boost Canada, Mexico, and the US economy by a large margin and allowed for easier trade and the lowered reliance of oil from Venezuela. Trump is eager to revise this because he wants companies like Ford to bring their production all to the US. Under NAFTA, Ford benefits from the ability to outsource, which costs less than producing full in America. I believe that the economy may take a small hit due to tariffs returning and relations with Mexico and Canada will get worse.
ReplyDelete1. Do you think NAFTA should be revised? No, If the current labor shortage is any indication, the jobs "lost" by NAFTA won't be missed. The free trade agreement will be missed dearly though.
ReplyDelete2. Why do you think Trump is so eager to implement the new trade deal? The more he can "squeeze" his diplomatic opponents, the more he solidifies his hardball negotiations reputation, which is great for domestic P.R. Regardless of whether or not this is good for the US
He also seems to believe in mercantilism, whereby trade deficits are universally bad. This isn't true: It's possible to profit from trade even when a trade deficit exists:
Suppose X can farm 4 food/hour or get 4 water/hour
Y can farm 4 food/hour or get 2 water/ hour.
If Y doesn't trade with X, is forced get water very inefficiently @ 2 water/hour
However, if Y decides to trade, Y can farm full time. Y is so much better at farming that even while trading a premium of 3 food for 2 water to X (whom can do both equally well, and thus values 1 food = 1 water), Y will net 1 food and 2 water / hour of farming.
Thus, even though Y paid a price premium, trade is still good for Y.
3. What do you think will happen if the new trade deal is emplaced? Farmers who export to Canada will suffer, Steelmakers who compete with Canada will thrive. The net effect may optimistically be zero in terms of jobs, but there will still be negative effects. The US is good at farming, and Canada is good at steel making. Letting both do what they're good at will mean more productivity and more money for both parties
I believe that NAFTA should be revised because it brings back the automobile jobs and industry back to America. Although it might be at the expense of Canada and Mexico, America ultimately benefits from its new wave of jobs that it will bring, or so as Trump hopes. The new trade deal may bring in some industrial jobs to America but it will affect the industries in Mexico and Canada that are the sources for the automobile industry. It might not change the job market as much as the more and more industrial jobs are being automated.
ReplyDelete^ Jeremy Ho
DeleteI feel that a complete revision of free trade between Mexico and Canada would be unwise. First off, NAFTA allows us to benefit from trade with Mexico and Canada by obtaining products that we need more of or can't produce. This gives us the opportunity to further specialize our economy which in turn results in better efficiency. NAFTA has taken jobs from the U.S., but we are an advancing economy that has already endured our industrial revolution, and we should be focused on more lucrative and high tech industries. In addition, American corporations have large amounts of capital already put in place in Mexico and Canada that were meant to work assuming that NAFTA stayed in place. NAFTA has it's drawbacks, but if we want to look towards the future and continue moving our economy forward, we need to continue specializing and we need to give lower skill jobs to countries better suited for them
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